Saturday 28 April 2012

Home price index up 1.3 per cent from February: CREA

The Canadian Press

OTTAWA — Home prices crept higher in March as a slowing Vancouver market was offset by an acceleration in prices in Calgary, Toronto and Montreal, according to a report by the Canadian Real Estate Association.

The MLS home price index was up 1.3 per cent in March on an month-over-month basis and up 5.1 per cent per cent compared with a year ago.

"Overall price trends show that Canada's housing market continues to moderate," association president Wayne Moen said.

"Price increases have been shrinking since last fall. While that trend paused in March, it may in part reflect an early spring in many parts of the country, resulting in increased competition among buyers."

The index is based on prices for one- and two-storey single family homes, townhouses and apartments in several key markets across the country.

The report found that price gains for single family homes were 6.4 per cent, roughly that for townhouses or apartments, that came in a 2.6 per cent and three per cent respectively.

Prices were up in all of the markets tracked, led by Toronto which saw a 7.3 per cent gain compared with a year ago, well ahead of Vancouver, which was second at 5.27 per cent from a year ago.

On a month-over-month basis, Toronto was up 1.65 per cent for March, traditionally a busy month for real estate sales, compared with Vancouver at 1.06 per cent.

Montreal gained 1.49 per cent and Calgary climbed 1.41 per cent in March.

The rise in the index followed a CREA report earlier this month that the average price of a Canadian home sold in March fell for the first time since January, a move attributed to an unusually large number of luxury properties sold in Vancouver last year.

The national average home resale price in March was $369,677, down from just under $373,000 in February and $371,591 in March 2011.

The decrease came as the number of sales conducted through the industry's MLS system was up 2.5 per cent from February, making last month the busiest sales month since April 2010.

Toronto's average residential price last month was $504,117 -- up from $456,147 in March 2011. Vancouver's average residential price in March was $761,742, down from $786,311 in the same month last year.

Wednesday 18 April 2012

Sales in major cities keep national property prices up in Canada

National residential property prices in Canada fell 0.5% year on year last month but market activity edged higher, according to the latest statistics released by The Canadian Real Estate Association (CREA).

Home sales rose 2.5% from February to March and actual, not seasonally adjusted, activity stood 1.6% above levels in March 2011, the smallest year on year increase since last April.

The number of newly listed homes eased 0.3% from February to March and CREA said that while still well balanced, the national housing market tightened due to the rise in activity.

Activity in March was up from the previous month in two thirds of all local markets, with Toronto, Calgary, and Edmonton contributing most to the national increase.

The activity level reflects moderate gains in a number of major centres, including Toronto, Calgary, Montreal, Ottawa, and Quebec City. Increases in these housing markets offset larger declines in Vancouver and the Fraser Valley, where activity last year ran at unusually strong levels.

A total of 108,373 homes traded hands in the first three months of the year, some 5% above the five year average for first quarter sales, 3.8% above the 10 year average, and 4.4% above activity in the first quarter of 2011.

New listings were little changed following their uptick in February, having edged lower by 0.3% on a month on month basis in March. The number of newly listed homes declined from the previous month in just over half of all local Canadian housing markets, and rose in almost all of the remainder.

‘The spring housing market is off to a good start. The numbers of sales and newly listed properties are up from levels last year, and the vast majority of housing markets remain balanced,’ said Wayne Moen, CREA’s president.

The national sales to new listings ratio, a measure of market balance, stood at 55.1% in March. This remains firmly in balanced market territory, but is up from 53.6% in February. Based on a ratio of between 40 and 60%, more than half of local markets were balanced in March.

The number of months of inventory stood at 5.7 at the end of March on a national basis, down slightly from 5.8 months in February. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of the balance between housing supply and demand.

The actual, not seasonally adjusted, national average price for homes sold in March 2012 was $369,677, representing a decline of 0.5% from the same month last year.

‘Average prices are up from year ago levels in most large urban centres. The slight decline in the national average price points to a tug of war between Toronto and Vancouver from the standpoint of their sales mix compared to last year,’ explained Gregory Klump, CREA’s chief economist.

‘The national average price was skewed higher last spring by record level high end home sales in some of Vancouver’s priciest neighbourhoods. It was expected that this would not recur this spring, which the latest sales figures confirm. The decline in average price reflects the change in Vancouver’s sales mix, not housing price deflation,’ he said.

‘At the same time, overall home sales activity in Toronto is stronger than it was last spring, and higher end home sales are up from year ago levels. Being by far the most active housing market in Canada, Toronto represents the single biggest factor supporting national average price compared to last year,’ he added.

Tuesday 17 April 2012

Canadian real estate: Toronto stays warm as Vancouver gets a chill

It’s been a strong start for spring house hunting across Canada, but the impact of Toronto’s hot market and Vancouver’s cooling market are being felt.

Home sales rose 2.5 per cent from February to March, lifting national activity to the highest monthly level since April 2010, according to statistics released Monday by the Canadian Real Estate Assoc. (CREA.)

While the average price of a Canadian home hit $369,677 in March, up but just half a percentage point from a year earlier, Toronto’s hot market saw gains of 10.5 per cent year over year, with the average house price hitting $504,117.

Vancouver, on the other hand, saw a cooldown — largely because an unprecedented buying spree last spring in certain upscale neighbourhoods sent sales and prices into the stratosphere — with the average price down 3.1 per cent to $761,742.

In fact, from February to March of this year alone, Vancouver prices were down more than 11 per cent when adjusted for seasonal fluctations, compared to an almost one percentage point increase in Toronto home prices during the same period.

Prices across the whole country were down 1.7 per cent from February to March when adjusted for seasonal fluctuations, according to the CREA monthly statistics.

New listings continue to be a challenge, especially in Toronto, with supply and demand tightening slightly.

A total of 108,373 homes changed hands in the first three months of this year, up 5 per cent above the five-year average for first quarter sales.

Thursday 12 April 2012

With no sign of cooling in Toronto condo market, housing starts rise sharply

OTTAWA - Canada's home-building industry was unexpectedly hot in March — particularly the condo sector in Toronto.

The latest data on residential construction surprised analysts Wednesday, with Canada Mortgage and Housing Corp. reporting 14,517 actual starts in March, giving a seasonally adjusted rate of 215,600 units a year.

That constitutes a five per cent jump from the previous month and the highest level of starts since the fall of 2008.

As well, CMHC upgraded its estimates for January and February, suggesting home construction was a key component of economic growth for Canada in the first quarter of this year.

Ontario, particularly Toronto, had the country's biggest increase in multiple-dwelling units, a group that includes condos and apartments. Multiple starts in the province jumped by 50 per cent on a seasonally adjusted basis.

"Certainly we think the housing sector will downshift at some point ... but we're not quite at that point yet," said Peter Buchanan, an analyst with CIBC World Markets.

"Clearly low mortgage-financing costs are helping to support the segment. This kind of level of starts is certainly above the underlying level of household formation by 20,000 or 30,000 (annually)."

Buchanan said the condo market may be sizzling due to demographics as baby boomers downsize from larger, detached homes, as well as international speculation and a trend to more downtown living among Canadians as the cost of commuting increases with rising gas prices.

CMHC said the condo trend is not sustainable, and many analysts agreed.

There is anecdotal evidence of a "shadow condo inventory" in Vancouver and Toronto, units that have been sold but are unoccupied and not for rent, said Scotiabank economist Derek Holt.

These unoccupied units could signal foreign investors who see Canada as one of the few global real estate plays that offer good returns, Holt said.

But it's always tricky to predict when or if a bubble will burst, he warned.

Holt noted that as far back as 2008, some were calling for Canada's housing market to plunge due to the same pressures that caused the U.S. market to collapse. However, Canadian real estate hasn't followed the same path.

"We know there are stressers in the Canadian marketplace just as there were in the U.S. It's just that you can never time the point at which they turn abruptly in the other direction," he said. "There would need (to be) a shock."

Speaking in New York on Tuesday, Finance Minister Jim Flaherty repeated his view that the housing market is slowing, adding he has no plans to tighten mortgage rules for a fourth time in six years.

"I would prefer for the market itself to correct to the extent that a correction is necessary," Flaherty said.

Flaherty did repeat his budget pledge to make changes to CMHC's rules for insuring mortgage loans, saying both his Finance officials and the Office of the Superintendent of Financial Institutions were engaged in the process.

Moody's rating service said Wednesday it foresees a soft landing for Canadian housing — not a crash — with prices rising a modest 1.1 per cent this year on average.

"But downside risks are present," it added. "Should growth in the U.S. slow, we believe Canadian house prices would fall (slightly). Should the U.S. fall into an outright recession, Canadian house prices would fall 5.6 per cent in 2012 and 10.3 per cent in 2013."

March's report did contain some evidence of retrenchment.

Starts in urban areas decreased by 27.7 per cent in British Columbia — a signal that the country's most expensive housing market, Vancouver, may be coming back to earth — and by 16.3 per cent in Quebec.

Vancouver has been cooling for months, said economist Robert Kavcic of BMO Capital Markets, so March's decline in starts was not surprising. He said starts in Vancouver have been averaging about 25,000 annualized — with allowances to fluctuations — which he described as a "balanced pace."

The Prairie provinces saw a 6.4 per cent increase in starts, with economically strong Alberta the leader in the region, while residential building rose by 2.7 per cent in Atlantic Canada.

Starts for single, detached homes slipped 2.4 per cent nationally.

Tuesday 10 April 2012

Canada's housing market heats up, fears of correction in the air

Spring is in the air in Toronto. Temperatures are up, and so too are the city's housing prices.

New statistics show the average cost of a Toronto home is up 10 per cent over a year ago. The average detached home is now going for more than $500,000.

Compare that to a decade ago, when it was about $250,000.

Soaring prices have would-be homeowners fleeing the big city in search of something cheaper and bigger.

Heather Lemieux, a realtor with Royal LePage, knows that all too well. Mere minutes after listing a house in North York, she had her first showing. And she's finding a lot of her clients are turning to the suburbs where housing is more affordable.

"That's what I'm hearing. 'I can't find anything affordable. I'd like a garage, a driveway...a yard would be nice,'" says Lemieux.

Real estate prices in Toronto still pale in comparison to metro Vancouver, which has a notorious reputation for expensive housing. In that city, the average house price is $679,000.

Across Canada, prices are up more than four per cent over 2011, according to Royal LePage. They could go up another three per cent by the end of the year.

"Depending on what part of the country you're in, the first part of 2012 was either good or very good," Royal LePage president Phil Soper says.

"In fact, nationally, the market did exceed our expectations in the early weeks of the year."

Business shows no signs of cooling. Over in Calgary, John Mayberry of echos Lemieux's sentiments. "I've been crazy busy. I've been in competing offers the last couple of weeks."

Royal LePage attributes the hot housing market to high consumer confidence and low interest rates. But as prices creep higher, so do fears of a correction.

Since 2009, the average Canadian home price has risen steadily to almost $350,000. That's in stark contrast to other world markets, including the U.S., where the average home costs just $175,000.

"When interest rates start to rise, people's ability to afford mortgages, tied to those high housing prices – that equation is just not going to work anymore," says Tsur Somerville of the University of British Columbia's Sauder School of Business.

That's when some economists predict prices will plummet – but not everyone, like Soper, agrees.

"But with the economy improving and continued low interest rate environment, it's hard to fathom a situation where we'd see a significant double digit price correction in our market," Soper says.

While that may be some relief to homeowners, it will only make things tougher for buyers.